Chapter 132: Bundling of Interests

It wasn’t surprising that Song Liang knew Li Mu was involved in running websites. After all, the initial funding for EasyListen came from the four people behind the Simple Plan, and given Song Liang’s connection with them, this was hardly a secret.

Li Mu didn’t hide it either. He nodded with a smile and said, “Around July or August, I started a music streaming site, and recently I launched a forum.”

Song Liang asked, “I heard both sites are very popular now with heavy traffic?”

Li Mu replied, “Not bad, but the traffic is still far from my target.”

Song Liang inquired further, “As the sites grow, your investment costs must also increase significantly, right?”

Li Mu nodded. “Yes. Once you reach a certain scale, investments grow exponentially. A small site might only need a few thousand yuan a year for servers and bandwidth at the start, but if growth is rapid, those costs alone could reach millions annually, and that might not even be enough.”

He thought ahead to the video streaming sites they planned to launch in the future. The server space and bandwidth expenses would be enormous, costs so immense that current internet companies today could hardly imagine them.

Song Liang then asked, “So, the further you go, the harder it gets to support on your own?”

Li Mu nodded again. “I’m already feeling the strain, which is why I’ve started preparing to seek financing.”

Sensing Song Liang’s keen interest, Li Mu tentatively asked, “Brother Liang, if I manage to secure Series A funding with a major company leading the round, would you be interested in co-investing?”

Song Liang’s eyes lit up. “You’re willing to dilute your shares to bring me in?”

Li Mu thought Song Liang suited his temperament perfectly. He was perceptive and thoughtful, and had been a great help. If they could form a partnership bound by shared interests, they could achieve many things Li Mu alone couldn’t. So he was inclined to offer Song Liang a stake in EasyListen and the forum’s ventures.

Moreover, Li Mu had always admired the prospects of real estate development in Yanjing, Shanghai, and even Guangzhou and Shenzhen. He knew nothing about real estate, but with Song Liang involved, their combined efforts might yield some gains in that sector as well. Diluting a small portion of his shares to get Song Liang involved was undoubtedly beneficial with no downsides.

Thus, Li Mu extended the olive branch: “Brother Liang, honestly, I only planned to dilute 10% of shares in Series A for capital investment. But if you’re truly interested and optimistic about this, I can reserve 5% just for you. When you invest alongside the lead investors, you’ll enjoy the same terms.”

By “same terms,” he meant equal treatment in valuation, liquidity, share adjustments, and so on.

For example, when choosing investors, Li Mu would give certain preferences based on their resources. A powerhouse like Baidu, if investing, would get a discounted valuation—say, 30% off—because their resources could accelerate EasyListen and the forum’s growth. Conversely, ordinary investment banks might get no discount or even a premium, like a 1.3 multiplier.

If Baidu led the Series A, they’d get a favorable price. But co-investors wouldn’t get the same deal. Still, most co-investors hopeful about the project and seeing a big name leading would still invest, betting on the future.

Li Mu’s offer to Song Liang was generous: he’d enjoy the lead investor’s terms even as a co-investor, a significant benefit.

Though Song Liang wasn’t involved in the internet sector, he understood financing and investment well. Hearing this, he knew this young man hadn’t wasted his time. Five percent sounded small, but for someone like him, unfamiliar with the internet and eager to jump on board, it was quite attractive.

So Song Liang said, “Little brother, don’t regret this. I am genuinely interested in the internet but didn’t know how to get involved. If you really want to give me 5%, I won’t hesitate to accept.”

Li Mu smiled faintly. “Brother Liang, once I say it, I won’t regret it. Also, this is Series A. If we get to Series B and valuations rise, and you want to cash out, I’ll communicate with the investors to give you priority. If you want to invest more in Series B, you’ll get the same terms. We can negotiate the exact percentage then.”

This was essentially a guarantee to Song Liang.

Entering at a valuation of tens of millions during Series A, and seeing the valuation multiply several times over by Series B, if Song Liang wanted out, Li Mu would ensure he could sell his shares directly to Series B investors, securing both principal and profits.

Hearing this, Song Liang was truly impressed. How could someone so young understand capital so deeply? If this weren’t a face-to-face conversation, he might have thought he was talking to a seasoned venture capitalist in his forties.

Still, Li Mu’s words made Song Liang very happy. He immediately said, “Little brother, then I won’t hold back! When you start Series A, I’ll invest personally!”

“Great!” Li Mu smiled slightly; their intentions were clear. Li Mu wanted Song Liang on board, and Song Liang was willing. They agreed to join forces and see where it would lead.

Song Liang wasn’t so much interested in sightseeing; he just wanted to get on Li Mu’s train. Whether it made money or not didn’t matter. He felt that forming some financial ties with Li Mu would open more possibilities for their futures.

With that in mind, Song Liang added, “Little brother, I just acquired a plot of land less than three kilometers southeast of the city center, near Sanpailou. Have you heard of it?”

Li Mu nodded. Sanpailou wasn’t famous yet; it would become a new residential area in Haizhou. As the city expanded southeastward over the coming years, it would become the most expensive real estate zone in Haizhou.

Song Liang said, “Construction starts early next year. There are many shareholders, so I won’t list them all, but I’m the major shareholder personally. If you’re interested, I can also offer you 5% on that project. How does that sound?”

Li Mu said, “Brother Liang, a development like that costs hundreds of millions. Five percent would be several million yuan at least. I’m afraid I can’t afford that!”

Song Liang smiled slightly. “That’s the total cost. The initial capital needed isn’t that high—tens of millions will do. The rest will be covered by bank loans and internal pre-sales.”

Li Mu asked, “Internal pre-sales?”

Song Liang laughed, “Yes. There are many shareholders, and plenty of others wanting to invest but unable to get in. Once construction starts, to quickly recoup funds, we offer a certain proportion of the housing units as pre-sales to these people. This helps bring the money back swiftly.”

Li Mu nodded, smiling. “Thanks for the offer, Brother Liang, but I can’t commit fully right now. How about you keep it reserved for me? If I can afford it later, I’ll join in with you.”

Song Liang laughed heartily. “No problem. If you’re short on cash, I can lend you some.”

Because their goals aligned—they both wanted to bind their interests together—the meal was particularly pleasant.

Li Mu thought that since EasyListen and the forum were still personal projects, they’d have to formalize into a company for Series A financing. Rather than scramble later, he planned to register a company in Yanjing soon.

However, the business registration offices were closed for the holidays, so he’d have to wait until after National Day. He could hire an agency in Yanjing to handle the paperwork and avoid much hassle.

Song Liang was curious about Li Mu’s valuation expectations for EasyListen and the forum. Li Mu casually replied, “Depending on the investors, the valuation should be between fifty and eighty million yuan, no problem.”

Song Liang was stunned. “That high?”

Li Mu nodded. “That valuation isn’t even too high.”

Given the current momentum of the forum, if they conducted Series A financing in October or November, with hundreds of thousands of registered users and over a million daily active users, they could easily secure tens of millions in valuation. Internet valuations always have a large margin because they’re never about current profits but about future prospects—in short, the “concept.”

In the future, websites like Kaixin might raise millions in Series A, meaning valuations would naturally reach tens of millions of dollars. By Series B, raising $20 million with valuations over $100 million is common. Within just months, valuations soar multiple times, showing how important the concept is.

When Xiaonei was booming, its valuation skyrocketed daily, sometimes ridiculously high. But like Kaixin, it eventually crashed after a few years. Music streaming still had five to eight years of potential, and the forum could last fifteen to twenty years. Even as nascent products, sharp investors would assign very high valuations.

Song Liang was clearly shocked by this valuation. He couldn’t fully convince himself it was feasible, but he didn’t mind. As long as a major investor led the round, he would follow. He might not understand the internet, but the investors did, and more importantly, he trusted Li Mu. Even if it meant investing a few million, he wouldn’t frown.

(To be continued.)